“In our way of life, in our government, with every decision we make, we always keep in mind the Seventh Generation to come. It’s our job to see that the people coming ahead, the generations still unborn, have a world no worse than ours and hopefully better.”

This quote from Chief Lyons (Onondaga), derived from the Great Law of Peace of the Iroquois Nation, has always struck me as an elegant and powerful statement of how we should judge the impact of our public policies and personal choices.

But I’ve also always had trouble putting the idea into concrete practice. I mean we’re talking about the impact on my great, great, great, great, great-grandchildren!

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As I noted before, my favorite description for the underlying nature of organizations is “a system of agreements.” But before we can really talk about systems, we need to talk a little more about what we mean by “agreements.”

When I just googled the definition of the word “agreement,” the following was returned:

Harmony or accordance in opinion or feeling.

A negotiated and typically legally binding arrangement between parties as to a course of action.

This was exactly what I was hoping for. Two distinct meanings, both of which are essential to the success of human systems.

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Does a private foundation always have to be just a “foundation”? Or can it try something different? Something more daring?

Most private foundations follow the standard “invest-then-grant” mode of operation. They run two distinct enterprises: (1) an investment enterprise focused on generating financial gains (profit) from the foundation’s endowment, and (2) a grantmaking enterprise giving those gains away to nonprofit (social benefit). As a result, the standard model for foundations is a bit schizophrenic.

Some foundations now add a third enterprise that is intended to bridge this gap, popularly called “impact investing,” where the goal is to generate both profit and social benefit through the placement of investment capital. But nearly all foundations that are engaged in impact investing still operate with a split personality — with grantmaking, impact investing and traditional investments all handled by separate staffs with separate goals and incentives.

Healing the philanthropic schizophrenia would require operating a single enterprise, operated solely for social benefit, making enough money to cover its expenses and needed reinvestment, and growing enough to keep its market value ahead of inflation. Now that would be interesting…

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An “organizational concept” is just a shorthand way to talk about the variety of features that a specific kind of organization has.

We regularly talk about “holding companies,” “nonprofits,” “trade associations,” etc., because these terms give us quick and useful insight into how an entity is organized and operates. Sometimes these distinctions are encoded into law, other times they’re there to help distinguish economic strategies, such as, “merchant banks,” “investment banks” and “mutual funds.”

When talking about a new or uncommon organizational concept, the burden of explanation falls on the user of the term. This is especially true for concepts of distributed organizations.

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The word “organization” carries with it so much baggage, I find it useful to have a precise working definition. It’s hard to get “out-of-the-box” if we don’t understand how big the box we’re in actually is.

I normally define organization something like:

A system of agreements, either implicit or explicit, which guides and coordinates actions among people, makes decisions binding on a group, defines common beliefs, and/or determines access to or disposition of resources created by or available to a group. Agreements usually cover such issues as authority to take or direct action, management of common resources, manner and consequences of making and enforcing agreements, among others.

This definition is intentionally broad — encompassing everything from culture as a whole to the family unit and friendships. For many purposes, such a definition is too broad and brings in too many unnecessary complications. However, if having an impact on social change is part of the intention, I haven’t found anything narrower to be sufficient.

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An occupational hazard of working in a foundation is the risk of developing egotheosis.

The condition results from the near-continuous deference that your opinions and judgements are given by grantees, consultants, etc. — anyone wanting access to the foundation’s money. Prospective grantees seeking funds will work hard to state their case in terms and arguments that are affirming to the your program strategy. If they hear you say something stupid, they won’t risk offending you by pointing it out. Current grantees seek out your opinions on issues to make sure that they can match any shifts in focus that might be brewing. Everything that you say, think or do is greeted with something akin to adoration.

Constant immersion in this environmental can easily lead you to think that you are omniscient, omnipotent and, well, god-like…

Here’s a quick self-test: In the image above, which hand is the grantmaker’s and which is the grantee’s?

This use of the term “viral” is now commonplace, i.e., something that suddenly becomes very popular and circulates quickly from person to person, especially across the Internet. Viral marketing, viral videos, viral political messages, viral cute cat pictures… They all share the common metaphor of a virus: first catch the virus, then spread the virus.

It is ironic that businesses and others have embraced this concept so completely, since it brings to mind some the worst stereotypes of business practices:

A virus takes over a host cell’s creative capacity and uses it to make copies of itself and perpetuate itself, usually at the expense of the host. Do big chain stores entering small towns spring to mind? Or the fact that you can’t go anywhere in the world without seeing a McDonald’s?

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Any principle — no matter how good, how true
or how just — if taken to an extreme,
will lead to disaster.

It’s easy to see this in the political realm. The democratic principle that each individual should have a high degree of autonomy, if taken to the extreme, can lead to anarchy. The principle of first voice, that communities should be able to define and protect their own identity, if taken to the extreme, can lead to fascism. Each principle is important to honor, but not to the exclusion of other, equally important principles.

Similarly, in the current commercial environment, every business needs to be highly innovative and adaptive to changing market conditions. It’s an important business principle. But if taken to the extreme, a company can drown in R&D costs and will never establish a clear brand in the marketplace. Giving people what they want to buy requires a certain degree of continuity over time and in terms of product portfolio, business processes and the like. Yet taken to the extreme, this principle can lead obsolete products and less productive processes.

Even the best principle needs one or more balancing principles to keep its potential excesses in check.

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I was first introduced to the principle of “first voice” by Helen Valdez, one of the founders of National Museum of Mexican Art in the Pilsen neighborhood of Chicago. She observed that all the curated exhibits of Mexican American art in the city (and most in the country) were curated by non-Mexicans-Americans.

“This is wrong,” I recall her saying.

“The members of a culture — those that experience it on a daily basis — should have the primary right to define, interpret and present their culture to others.”

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I’ve spent much of my career exploring how we might improve the social and environmental impact of business and other economic enterprises. And much of that time has focused on the challenge of investing charitable assets for both social and economic returns, which for many is the very definition of “impact investing.”

So, this is a fairly loving critique. In fact, it won’t really be a critique of impact investing at all, but instead a critique of Impact Investing (note the change in capitalization). That is, this is not intended to be a criticism of the activity or intention of investing for social benefit — which is a central issue of our time — but rather a concern that by treating it as a field we may inadvertently marginalize and minimize its potential.

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Well, ok, most of the time… And it’s a great risk for a grantee to point it out, especially when their grant is up for review.

But one such brave soul taught me an invaluable lesson.

A major conference was is town, and we took the opportunity to host a dinner for several of the Joyce Foundation’s major environmental policy grantees at my favorite local restaurant. We were proud how consistently forward-thinking and innovative our grantees were, and wanted to thank them for their often under-appreciated work.

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$18 million… You can do a lot with a grantmaking budget of that size. But with all the important things to do in the world, where should that first grant go? Which grantee deserves that level of confidence and support?

Answering these questions led me to a surprising result, and a staggering responsibility.

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When we say that a person is “principled,” we generally mean that they live their life based on a strong underlying ethic — a set of beliefs about proper behavior toward other people, and a commitment to stick to those beliefs even when tempted to act otherwise.

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Surprised, I reflexively leap to one side, lose my balance, stumble over a curb, and abruptly sit down on a patch of grass. Muttering mild oaths under my breath, I watch as she gracefully dodges among the joggers, baby carriages and other bikers, and quickly disappears from sight. The juxtaposition of her balance, agility and speed and my awkwardness at first grates on me, but then I pause.

How did she learn to do that?

If I got on a bike and tried to follow her, I almost certainly would kill somebody.

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Visa is often cited as an early prototype of chaordic organization. Despite Dee Hock’s caution that the organizational design of Visa was “at best a third right”, the story is both inspiring and instructive. What follows is an abbreviated rendition. For complete history, please read Dee’s book, One from Many: VISA and the Rise of Chaordic Organization.

A TROUBLED INDUSTRY

In 1958, Bank of America issued sixty thousand credit cards to the residents of Fresno, California. After years of losses, the program became profitable and the bank blanketed the state with cards. In 1966, several California banks countered by launching Mastercharge. In turn, Bank of America began franchising BankAmericard.

Other large banks launched proprietary cards and offered franchises. Action and reaction exploded. Banks dropped tens of millions of unsolicited cards on an unsuspecting public with little regard for qualifications. Within two years, the infant industry was in chaos. Issuing banks were thought to be losing hundreds of millions of dollars, politicians were alarmed, the public was exasperated and the media was criticizing everyone involved.

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Summary: The rapidly changing technological landscape is just one element of a much deeper set of societal changes. The institutional roles and relationships that make up the nonprofit sector will need to change dramatically before it can thrive in the next century.

In the middle of the 20th century, scientists and economists seriously pondered the question of whether uranium metal could replace gold as the standard for international currency and exchange (Scientific American, 1947, 1997). They surmised that energy — the capacity to do work — was a much more solid foundation on which to build economic value than an arbitrary malleable metal.

Although there is a certain elegance to this argument, looking back from where we are today, it seems ludicrous. But what actually happened was even more outlandish.

A seed falls to the ground. It waits for conditions to be right, and once they are, it begins its magic. Protoroots probe their surroundings, selectively absorbing the molecules they need. The roots pass the nutrients to the shoots as they reach for the sun.

Leaves and branches form, and eventually a flower buds, then blossoms.

Bees, butterflies, or insects may complete the pollination process. Deep inside the plant, molecules reorganize themselves into a seed, so that the cycle can repeat itself the following year.

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A friend of mine* was at his favorite beach, enjoying the sun and the waves.

He had noticed for years that people dived for abalone just a little ways offshore, and seemed to have good luck on most days. Today was one of those days. A diver came out of the water and walked right by him, proudly carrying his day’s find.

“There’s nothing special about that guy,” my friend thought. “And it looks like fun.” He stood up right then and there, walked over to a nearby dive shop, bought the necessary gear, and headed back to the beach. Within a few minutes he was ready to go, and headed out into the water.

About an hour later, he came back to the beach a wet and discouraged man.

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When most folks talk about “distributed” systems, they normally have computers or the Internet in mind. Or maybe they have been exposed to “complex adaptive systems” theory or “chaos theory” and are thinking of natural ecosystems, quantum mechanics or some other arcane discipline. There’s an enormous amount to learn from those kinds of systems, but…

I’m not talking about any of that. Or, well, not entirely…

I’m talking about when people are trying to achieve an important goal together, and where each person and group of people insist on maintaining their own rights – and are willing to honor each other’s rights — to protect their autonomy, their liberty and anything else that is deeply important to them. And even beyond that, they are willing to enter in concrete and binding agreementsto work together in a way that meet these criteria.